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Dear Clients and Friends of Rayner Essex

Welcome to our Spring Newsletter 2020.

It's been quite an unusual start to the year with the Coronavirus Pandemic being at the top of the agenda on a global scale and the world's populations having to adopt, not only new ways of working (where that's possible), but also radically changing how we live. Whilst this is a worrying and uncertain time it has also been a time to witness great compassion and endeavour whether that's neighbours helping and supporting each other, school children 3D printing medical visors,  clapping for carers or getting behind the inspiring story of Captain Tom Moore who raised more than £30m for NHS charities.

The team at Rayner Essex have adapted well to working from home and quickly embraced new technology to ensure that your service and support is of the highest quality and uninterrupted. We also hope that you have been enjoying our regular updates which have been designed to summarise and simplify some of the measures announced to support you and your business.

We thought we would also take this opportunity to let you know about some of the other news we have.

As soon as the COVID-19 crisis began to unfold we have made it our mission to keep you up to date of all financial developments and to support and advise how they may affect you. Members of the team have also been providing hints and tips on cashflow, invoicing, preparing accounts, etc. You can find all our resources in the dedicated section of our website here - please bookmark the page as it is updated regularly. 

Articles on:
Entrepreneurs' Tax Relief

New Tax Manager - Carolyn Nugent

Budget Report 2020
Tax Card 2020/21

Entrepreneurs' Relief: outlook changing
Before the Budget, there were fears that it might be scrapped altogether. It wasn't. Entrepreneurs' Relief (ER) lives on, but with a new name - Business Asset Disposal Relief - and a new, lower lifetime limit.
ER, as we will call it for one last time, is a capital gains tax (CGT) relief available not just to company shareholders, but to owners of unincorporated businesses. It has been the relief, par excellence, for someone looking to dispose of all, or part of, a business and extract a capital sum, for example on retirement. Applying to gains on disposals of shares, or securities in a trading company, it gives access to a niche 10% rate of CGT, rather than 20%. In some circumstances, it can be used for disposals of assets such as land and buildings used by a company, but owned by an individual. ER can also reduce CGT paid on disposals of qualifying shares from an Enterprise Management Incentive scheme. ER is subject to a lifetime limit, hitherto £10 million.

Budget 2020 brings a new lower lifetime limit of £1 million. This has immediate effect, applying to qualifying disposals made on or after Budget day, 11 March 2020. The value of ER claimed for qualifying gains in the past will contribute to the new lifetime limit, and this will now need to be taken into account when assessing eligibility for any future claim. The new date is a cliff edge: there is no period of transition. The new limit can also apply where a business ceased trading before 11 March 2020; or the gain is a deferred gain that accrues on a chargeable event on or after 11 March 2020.

Despite the change, ER remains a vital part of the exit strategy for business owners. Ensuring availability of ER has always depended on paying close attention to the rules, and this is unchanged. In the current volatile economy, it may be of particular relevance to those reshaping their plans for the future.

Please contact Mark for further advice.
IR35: Change on hold
The off-payroll rules, often called the IR35 rules, were introduced because of concern about loss of tax revenue, particularly National Insurance contributions (NICs), arising through the use of intermediaries in the labour chain.
Intermediaries are most often a worker's personal service company (PSC), though they can also be an individual, partnership, or unincorporated association. The government believes many off-payroll workers are wrongly classified for tax purposes, and should be treated as employees.

The rollout of the IR35 rules to the private sector, set to come in on 6 April 2020, is now on hold until 6 April 2021. This is to help the business community cope with the impact of coronavirus, and the government emphasises that it is a 'deferral, not a cancellation' of the policy. So what do contractors do now?

From 6 April 2021, therefore, if you work for a large or medium client through a PSC or other intermediary, responsibility for determining employment status passes from your PSC to your client. Further information can be found here
But for now, it's business as usual. If you work for a client in the private sector, you determine employment status on your contract, not the client. Deduction of tax and NICs remains your responsibility. To help with questions around employment status, HMRC has enhanced its online employment status checker tool, CEST, although there are still reservations about its ability to cope with the nuances of real life.

But the late change may create practical problems. What if you've already been given a Status Determination Statement (SDS), as if the new rules were now in force, for example? An SDS has no legal standing this year. It is up to the PSC to determine its status, and deal with tax and NICs as before. HMRC says it won't use any SDS already issued as evidence if there is a dispute over your employment status in the next 12 months.

Please contact Accounting Solutions Director Claire Barringer for further information.
New London Tax Manager Carolyn Nugent
We are delighted to announce that Carolyn Nugent joined our London team as tax manager in March and immediately started working from home! Not the most usual start to a new role but Carolyn is settling in well.

As a fully qualified member of the Chartered Institute of Taxation and having worked in a variety of firms including the Big 4, she brings a wealth of experience advising private clients with their tax affairs.

If you would like to contact Carolyn you can reach her here
Q&A with Jason Croke - VAT Director
VAT - Cashflow is King
VAT is often seen as a burden, you are basically an unpaid tax collector on behalf of the government, and therefore governments around the world like it.  VAT is also layered in often complex and sometimes illogical rules which adds to the general feeling of negativity towards it.
But those complex rules, once understood, can prove beneficial to a business.  There are a variety of opportunities such as flat rate scheme or annual accounting that may benefit some. For most businesses, cash is king, a lack of cashflow can be the difference in survival of a business.
Easy wins include using cash accounting, you only pay the VAT to HMRC when your customer pays their invoice. This stops the situation where you are paying HMRC before you’ve collected the VAT from the customer.  A bonus of cash accounting is that because you don’t pay VAT to HMRC until you get paid, where you have a bad debt, you don’t have to apply bad debt/clawback rules.

What can businesses do to improve cashflow?
During the current COVID-19 situation, HMRC have allowed VAT to be deferred for returns due in April, May or June, that is covered in our extensive Covid19 section on our website, but in brief it allows a VAT liability to be deferred until March 2021.

But what else can be done?

Easy wins include using cash accounting, you only pay the VAT to HMRC when your customer pays their invoice. This stops the situation where you are paying HMRC before you’ve collected the VAT from the customer.  A bonus of cash accounting is that because you don’t pay VAT to HMRC until you get paid, where you have a bad debt, you don’t have to apply bad debt/clawback more

9 accounting and tax exams passed, including success in AAT, ACA, ACCA and CTA exams. Special congratulations to Rhys Bevan, Kieren Connolly and Felicity Crabtree in our Accounting Solutions Team – Rhys became fully ACA qualified in January, Felicity successfully completed her Level 3 AAT and Kieren became an ACCA member in April.
2 long service milestones reached – congratulations to Marion Woods for 20 years with the firm and to Christine Whitley for an impressive 30 years of service

2 staff promotions
Countless cakes and cookies eaten during Time to Talk day on 6th February when we took time out over a coffee and cake for a chat amongst colleagues, and to encourage greater openness and reduce the stigma around discussing mental health issues in work
We are very excited to announce the birth of 1 new baby boy with another 3 babies due in the next couple of months! 

Surely one of them will be an accountant! 😊
Sadly so many of our events have been cancelled or postponed but we are hoping (subject to COVID-19 developments) to be hosting some events later in the year. Some dates for your diary:

An update from our SportsAid Lunch

We recently caught up with one of the athletes, cyclist Tom Sharples, who we sponsored at our Lunch Club in May last year. The funds that you help raise through attending our events, for which we thank you, make such a difference to these young athletes and so Tom gave us an update on what he has been doing since and this is what he said,

Tom Sharples

"Since receiving the sponsorship money from SportsAid at the Rayner Essex lunch, I have gone on to be selected for the GB junior academy after a very successful national championships. I took the under 16 national record in the flying 200 and followed on to come away with 2nd in the under 16 sprint, junior (u18) sprint and 3rd in the standing 500m. 

Without the support from SportsAid and Rayner Essex I don’t think that I would have been able to achieve what I have, so I am incredibly grateful for their help. I raced abroad with GB for the first time in Holland during January, although it was a daunting experience, it laid the foundations for much bigger things to come. Although, I am upset that the racing season has been cancelled, it means that I can now get a solid few months of training down where I wouldn’t have been able to before."

We wish Tom even more success and whilst we're sure he may become a household name we will keep you up to date on his progress.